Northern Gateway equity offer would give First Nations about $70,000 a year: report

TERRACE, B.C. — The equity offer from Northern Gateway to aboriginal groups along the route of a controversial oil pipeline would amount to as little as $70,000 a year for some bands, according to one base offer obtained by The Canadian Press.

The company says that is not the average offer, and in fact is in the lower range of a wide array of agreements, but some aboriginal leaders says it’s a far cry from the path out of poverty the company claims.

“Only minimal economic benefits were offered,” Chief Rose Laboucan, the six-term chief of the Driftpile Cree Nation northwest of Edmonton, told the federal panel assessing the project during final arguments about the controversial project.

Laboucan said the band sat down to negotiate with Calgary-based Enbridge but would not sign the equity agreement “for ethical reasons.”

“I remember being in that room and having that binder: ‘Here is the agreement. Take it or leave it.’ Many nations agreed, but we didn’t,” she said.

Aboriginal buy-in is a major road block for the $6-billion project that would deliver heavy oil from just outside Edmonton to a tanker port in Kitimat, B.C.

Northern Gateway has offered aboriginal groups along the route the opportunity to buy into a 10 per cent equity stake in the pipeline. A copy of the offer was obtained by The Canadian Press.

A legal assessment for one of the bands compiled in 2011 and also obtained by The Canadian Press, said the anticipated annual average net income — after repayment of the loans with one per cent interest for Enbridge over and above the rate at which the company borrows the funds — would be $70,500 a year. While the assessment expressed concern that the bands would have to borrow the money to buy into the agreement from the company, an Enbridge spokesman said the offer to borrow the funds was made at the request of aboriginal groups, which might not be able to obtain as low a rate of interest as the pipeline company.

The $70,000 offer would be on the lower end of he scale, for a band located some distance from the pipeline route, said Paul Stanway, company spokesman. The average offer would be in the range of three times that amount, he said.

“The numbers reflect the impact that the project would have on a particular aboriginal community,” Stanway said Sunday, adding that distance from the actual line is one factor in the equation.

Enbridge spokesman Ivan Giesbrecht said in an email that the 2011 document would indicate “a starting point, rather than a finalized, executed agreement between Enbridge and one of our Aboriginal equity partners.”

“A document issued in 2011 would have been augmented by further dialogue and understandings between Enbridge and Aboriginal groups along the right of way,” he said.

Giesbrecht said that as the pipeline route was determined, the company established a 160-kilometre-wide corridor for aboriginal engagement and consultation. As the process has unfolded, bands with traditional territories in the corridor have been identified and added.

Northern Gateway has said 60 per cent of aboriginal groups along the pipeline route have signed on, but the Haida Nation told the panel last week that 18 equity packages were offered to Alberta aboriginal groups and 15 signed up. In B.C., 27 offers were made and 11 First Nations signed up.

It’s more than the two bands that have acknowledged the agreements, but less than the 60 per cent claimed by Enbridge.

Giesbrecht argued the benefits go beyond equity, amounting to $400 million in employment, procurement and joint venture opportunities over three years of construction, but it’s not enough even for some supporters of the project.

“Ten per cent is totally inadequate,” said Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, an Ottawa-based public policy think tank.

“You split that up amongst the dozens of First Nations along the pipeline route and it’s just not enough, in my view, to make the project attractive or to outweigh some of the other objections.”

The Institute published a report last month trying to lay out a path forward for the project that would pump billions of dollars into government coffers.

It recommended a higher portion of equity be split among the bands, in addition to a general corridor benefit agreement and individual agreements that would include supply and service deals.

The institute suggested, among other things, that the federal government designate the pipeline corridor land as reserves, giving First Nations the ability to raise tax revenues and fees from allowing the right-of-way.

It also recommended the Alberta and federal governments provide fully repayable loans to First Nations to buy into the equity arrangement.

“By the time you get property taxes and various other revenue flows out of it, you’re starting to put together a fairly attractive package,” Crowley said.

Chief Herb Arcand, of the Alexander First Nation west of Edmonton, said his community has signed on, despite concerns about a lack of consultation from the provincial and federal governments.

“Business is business,” Arcand told the panel, saying the deal will generate long-term benefits for the band.

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